USOC Heads to Lausanne for Olympic TV Rights

06/03/11

The Beau Rivage Hotel in Lausanne is the site of the TV rights auction. (ATR)

(ATR) The U.S. Olympic Committee has so much riding on the outcome of the U.S. television rights auction next week that its top officials will be lakeside in Lausanne where the high-stakes bids will be opened.

Chairman Larry Probst, CEO Scott Blackmun, general counsel Rana Dershowitz and chief communications officer Patrick Sandusky -- will be in the room for presentations from three TV networks June 6 and 7. Precedence suggests they will also witness the opening of the sealed envelopes containing the bids, as have other USOC delegations at past TV rights showdowns.

The IOC and the networks will meet at the belle epoque Beau Rivage Palace Hotel overlooking Lake Geneva.

While the IOC will make the decision following the two-hour presentations from Fox, ESPN/ABC and NBC/Comcast, it cannot accept the winning bid without the consent of the USOC, which controls the use of the Olympic rings in the U.S.

The USOC currently receives 12.5 percent of the U.S. TV rights as part of the controversial revenue-sharing agreement with the International Olympic Committee. That number could change when the two sides finally hammer out a new arrangement, with discussions expected to continue later this month.

The USOC also strikes its own deals with the winning network for the rights to air the popular U.S. Olympic Trials. In 2010, broadcasting brought $105 million into the USOC coffers, more than any other revenue stream.

No other NOC gets a share of the broadcast rights fees, much to the chagrin of some. Funding instead is funneled through the Olympic Solidarity program of the IOC.

Record-Breaking Deal Sought

Richard Carrion, the lead negotiator for the IOC, and President Jacques Rogge have made it clear they hope to exceed the last deal. In 2003, NBC bid $2.2 billion for the rights to the 2010 and 2012 Olympics, beating ESPN and Fox. That package gave the IOC more than half of its worldwide broadcast revenue.

An informed industry source doubts the IOC will get $2 billion, given that the time zone for Sochi does not allow for any live events in U.S. primetime. Geopolitically, Sochi also is in a volatile area of the world, leading to more risk.

Carrion says the network plans for broadcasting the Games on various platforms also will factor into the decision, but former USOC executive director Harvey Schiller tells Around the Rings, “It always gets down to the number.”

Schiller, who was a high ranking Turner Broadcasting executive, adds, “In today’s world, because of the different abilities to distribute content, it can be a little more complicated in terms of what the broadcaster may want to offer. Now there are a lot of moving parts.”

Another informed source says that if one bid is considerably higher than the others, it will win. But if they are close, the marketing plan will be the difference, as well as exposure and distribution.

Bids for Two Olympics or Four?

NBC, ESPN and Fox each have multiple networks and platforms at their disposal. They can submit a bid only for the 2014 Sochi and 2016 Rio de Janeiro Olympics, or they can make an offer for the next four Olympics, including the 2018 and 2020 Games at sites yet to be determined.

“I think the smart thing is to bid for all of them,” Schiller says. “Why go through this again?”

The recent trend in U.S. sports buys in the last 12 months, which includes the National Hockey League and the Pac 10 college athletics conference, has been for deals lasting 10 years. And, Schiller says, “I would hope that if they want it, why would they only want it for two Olympics?”

CBS, the fourth major U.S. network, will not participate in the bidding for the second time in a row. The network is doing well -- particularly in primetime -- and had no compelling reason to take on the Olympics, which it last

Dick Ebersol will not be at the table for NBC for the first time in almost 20 years. (Getty Images)

broadcast in 1998. NBC lost more than $200 million on Vancouver.

According to SportsBusiness Journal, Fox will make the first presentation on Monday followed by ESPN on Tuesday morning and NBC on Tuesday afternoon. Each will then submit a sealed bid. The IOC reserves the right to ask for another round if it is not satisfied, but Carrion has said he wants to finalize the deal before the IOC Session in Durban, South Africa, in early July.

No Clear Favorite

Some informed industry sources believe ESPN is the odds-on favorite, with its four networks and guaranteed subscription fees, while Fox, which is owned by NewsCorp and Rupert Murdoch, is a wild card.

Others believe NBC, which has broadcast the Summer Games since 1988 and the Winter Games since 2002, is the front-runner.

However, as the IOC postponed the auction to wait for a more favorable economic climate, Comcast gained control over NBC Universal in a merger earlier this year. Comcast has said it will be very disciplined when bidding for sports properties. Combine that with the resignation of Dick Ebersol, the NBC sports chief and Olympics guru who could not reach agreement on a new contract, and Comcast loses the comfortable relationships Ebersol had with the IOC.

“No one knows how much is in the treasury, what they’re willing to put up,” Schiller says.

The top three executives at the table for ESPN will be president George Bodenheimer, John Skipper, executive VP of content and Rob Simmelkjaer, a vice president and the point person who developed the plan for the bid.

ESPN promises to show all events live.

“No one else comes close to ESPN in our ability across multiple platforms to present and promote the Olympics and to raise the profile of Olympic athletes,” says Mike Soltys, VP of communications.

He points out that ESPN2 is in 100 million homes, making it larger and more recognizable than the third option with the other two networks.

Sweetening the Pot

Disney CEO Bob Iger will also be in attendance, leading to speculation that Disney could become an Olympic sponsor much as NBC parent company General Electric did in 2003 with a $200 million sweetener. Insiders believe, though, that the $2 billion NBC rights fee tipped the balance more than the GE contribution.

“ESPN really wants this,” Schiller says. “Bob Iger has always been a fan of the Olympics.”

ABC broadcast the Winter Olympics from 1964-88 and the Summer Games from 1968-84, with the exception of 1980, aaired by NBC.

Fox has never aired the Olympics. Murdoch likes to play on a global scale, but Fox will have to answer concerns about a possible conflict with the 2014 Super Bowl, which it will broadcast. If the NFL expands its regular season to 18 games, the Super Bowl could coincide with the Olympics.

“They all want to be a good partner,” Schiller says. “The strongest statement that could be made to get across this threshold is a combination of 1) the price and 2) are you going to develop a strong partnership to grow the Olympic Movement over the next eight to 12 years?”

Schiller says the winner could launch a new cable network to enhance the federations, whose share of Olympic money comes primarily from television. This would not be a revival of plans for the controversial U.S. Olympic Network.

Whichever U.S. network wins the rights, it will be identified with the most powerful brand on the planet.

“We’re looking forward to good productive meetings in Lausanne,” Sandusky tells ATR. “Obviously there’s a lot of interest in bidding for the Games, which shows the strength of the Olympic Movement. We’re happy to continue to be working in good partnership with the IOC.”